Odds of winning get longer as new wrinkles added to slot machines, although players may believe otherwise

With its heavy cast iron cabinet and brass claw feet, the first coin-paying slot machine looked like a mash-up between a cash register and a Victorian-era bathtub.

Gamblers in the saloons and brothels of 1895 San Francisco dropped a nickel in the Liberty Bell's coin slot and tugged a spring-driven lever to set its three mechanical reels spinning. If the cylinders stopped with three bells aligned in the glass window -- the top prize, with odds of one in a thousand -- the lucky bettor won 50 cents.

Charles Fey, the Bavarian-born tinkerer who invented the contraption, would hardly recognize the Liberty Bell's descendants. More than a century later, the slot machines that have become the most popular form of casino gambling are sophisticated computer-controlled devices.

A few retain vestigial pull-levers, a nostalgic nod to the one-arm bandit days. But coins no longer tumble into the hopper; winners are paid with a bar-coded ticket while the machine's speakers mimic the jangle of a jackpot. Microprocessors and random-number generators dictate the outcome. Actual reels have been replaced by digitized "virtual" ones.

The advanced slots are more reliable and tamper-resistant than their mechanical ancestors. The computer's versatility means faster, more exciting games, and the possibility of bigger payouts.

But critics say the machines are more misleading and manipulative, too -- programmed to capitalize on gambling myths and to lure players to continue spending with tantalizing near-misses, losses disguised as wins, opaque odds, and other strategies. Under American and Canadian gambling regulations, the tactics are perfectly legal. They may also contribute to some gamblers getting hooked.

"Before virtual reels, you couldn't really have big jackpots," said Kevin Harrigan, a computer scientist at Canada's University of Waterloo who researches slot machine design and its impact on people."Once you could manipulate the odds -- which I would argue almost every single bit of it is deception -- that's when things changed."

Reel chances of winning

To understand Harrigan's and others' concerns, it's important to know something about probability and how slots work.

Gamblers wager money on the likelihood of an event -- in the case of slots, it's the appearance of a matching set of symbols, such as three cherries or five images of Tony Soprano, on the slot's "payline." The number of reels, and the number of symbols on each reel, determines a bettor's chances.

Fey's original Liberty Bell had three reels, each with 10 symbols (including one bell). Each symbol was as likely as another to stop on the payline. So the odds of winning weren't bad: 10 x 10 x 10 = 1,000, possible symbol combinations, and a one-in-a-thousand chance of the three bells lining up on a given spin.

To attract serious gamblers, though, casino operators needed to offer bigger jackpots than the Liberty Bell's two-bit payoff. And to avoid losing money with these bigger jackpots, they needed to decrease the odds of winning, by making the jackpot harder to hit. So mechanical slot machine makers began to add more symbols (and blank spaces) to the reels.

The symbols and blanks are collectively known as stops. Adding more stops increases the chances that the reel will halt on a blank, or on a losing or low-paying symbol. A gambler playing the 22-stop, three-reel mechanical slots common in the early 1970s had a 1 in 10,648 chance (22 x 22 x 22) of hitting the top prize on a single spin.

But the tactic had a physical limit. To fit more symbols on the reels, either the symbols had to shrink -- making them harder for players to see -- or the reels had to get bigger -- resulting in an unwieldy machine.

Another approach, boosting the number of normal-sized reels to four or five, drastically cut the probability of winning without causing as much of a space problem. Gamblers balked at the higher-reel machines, however, because they correctly sensed their odds were much worse than with the three-reel models.

Virtual reels alter odds of winning

With the rise of computer technology in the 1980s, Norwegian mathematician Inge Telnaes devised a brilliant, if devious, solution. In 1984, he patented a revolutionary invention that made it possible for a standard-sized three-reel slot machine to offer the big jackpots that gamblers craved, with the long odds that casinos wanted.

Telnaes accomplished this feat by creating phantom "virtual" reels in the slot's computer memory. The virtual reels are invisible to gamblers. They have more stops -- often dozens or hundreds more -- than the physical reels that the players see spinning on the machine's face.

The disparity between the few stops on the "real" reels that gamblers see and the many stops hidden from view on the virtual reels makes it seem like the odds of winning are much better than they are.

There may be four cherries among the real reel's 22 stops, suggesting that the odds of a cherry popping up in the payline are 4 in 22. But if there are 64 stops on the virtual reel, and two of the "real" cherries aren't linked to any virtual reel stops, then the odds actually are 2 in 64.

The computer randomly halts the virtual reels, so the slot machine's play is technically still driven by chance. But Telnaes' approach clearly is meant to mislead slots gamblers. As he candidly noted in his patent application, "it is important to make a machine that is perceived to present greater chances of payoff than it actually has, within the legal limitations that games of chance must operate."

Many newer all-digital slot machines have animated reels rather than actual ones, but they still employ Telnaes' basic strategy: using visual displays that portray better odds of winning than are actually the case.

In the 1980s, when the Nevada Gaming Commission was weighing whether to allow virtual-reel slots in the state's casinos, several slots manufacturers raised concerns, according to meeting transcripts that Harrigan reviewed.

A Bally's executive worried that players were being "visually misled." International Game Technology's corporate lawyer told the gambling commissioners that a jackpot symbol "appearing four times as often [to the player] as it actually is seen by the computer" amounted to "false advertising."

IGT's man also fretted about the repercussions of slots programmers exploiting virtual reels to indirectly cause "near-misses." That's where the spin stops with a jackpot symbol just above or below the payline, spurring bettors to try again.

Whatever their apprehensions, the companies recognized the potential bonanza that the virtual-reel machines posed, and they vowed that if the Nevada regulators approved them -- which they did -- they would offer their own versions. IGT, in fact, bought the rights to Telnaes' invention and licensed it to other manufacturers.

Slot machines eventually surged ahead of table games as casinos' primary source of gambling revenue. In 2009, the average Las Vegas Strip casino raked in more than $307,000 each day from slot machines, 24 percent more than its table game take.

The Nevada gambling regulators, for their part, rejected the idea of requiring that slot machines display the odds of winning. As then-commissioner Richard Hyte reasoned, that would "take away the mystery, the excitement and entertainment and risk of playing."

Besides, "there isn't an establishment that would agree with posting those odds," Hyte remarked, perhaps forgetting that the gaming commission had the power to compel such an action if it chose.

Harrigan, the lead scientist on the University of Waterloo's Problem Gambling Research Team, has uncovered other methods that slots designers and casino operators use to keep players on the machines.

Video slot machines allow players to place multiple bets on how winning symbols might line up on the screen when the spinning stops -- horizontally, vertically, diagonally like tic-tac-toe, or even in crazy W-shaped squiggles.

The payoff on some of those multi-line bets can be less than the total amount the player wagered. Technically, that's a loss: If a player bets a dollar's worth of credits and wins 75, he's down 25 cents. But the machines are programmed to react as if the gambler has won a profit, with flashing graphics, ringing bells and such. Harrigan calls this effect a loss disguised as a win.

In Canada, where the provincial governments run the casinos, Harrigan used the Freedom of Information Act to obtain design documents for a video slot machine called Lucky Larry's Lobstermania. He found that, when gamblers bet on the maximum 15 lines, they were considerably more likely to experience losses disguised as wins than actual wins.

The documents also showed that Ontario gambling regulators had approved nine different versions of the Lobstermania slot machine. The slots all appeared the same, but varied in their "payback percentage" -- the portion of a gambler's wager that, on average, the machine is programmed to return. The identical-looking machines had payback percentages ranging from 85 to 98 percent, meaning the casinos kept between 2 and 15 percent of bets.

In principle, there's nothing surprising or untoward about payback percentages, also known as "holds." Casinos are in business to make a profit, and the American Gaming Association, the trade organization that represents them, takes pains to publicize that the house always has the edge. State gambling regulations, including ones recently drafted for Ohio, permit holds as large as 15 percent on slot machines. It's also not uncommon for regulators to allow a casino to have identical machines with varying holds, as Ontario did.

Possible links to gambling addiction

But Harrigan and other researchers worry that such misleading practices may encourage excessive, even addictive, gambling.

Various problems lead people to gambling addiction. One thing pathological gamblers have in common, though, according to the most widely accepted psychological model, are faulty, deep-seated beliefs about their personal skill and their chances of winning.

View full sizeAssociated PressNear-misses can mislead slot machine players into thinking that the next spin will be a winner, even though the outcome of each spin is unrelated to the next.

Repeated exposure to a stimulating experience -- what psychologists call conditioning -- is what causes those gambling fallacies to take root.

If a slot machine repeatedly signals that a money-losing spin is a winner, a gambler begins to believe he's winning more often than he really is.

If the slot occasionally delivers a near-miss, a gambler may wrongly conclude that the next spin will be a winner and keep betting, even though near-misses are meaningless and have no effect on the next, randomly-generated outcome. (Harrigan, who's currently studying how problem gamblers respond to near-misses, suspects they regard them as "almost wins" rather than losses.)

And if a gambler consistently wins more on a particular slot than its identical neighbor, he may figure that his special playing talent accounts for the difference, when it's really just how the machine is programmed.

"What I think keeps people gambling are the [slot machines'] structural characteristics, the things like the illusion of control and the near-misses and the event frequency," said psychologist Mark Griffiths, who directs the International Gaming Research Unit at Britain's Nottingham Trent University. "If you're vulnerable or susceptible, I think those things absolutely contribute to addiction."